Charities could quit the high street as a rise in rates is on the horizon

Proposed cuts would cost charities almost £2m from next year, according to The CRA

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Welsh charities fear they may be forced away from the high street if recommendations to increase business rates are accepted by the Welsh Government.

An independent report has called for the business rate relief given to larger charity shops trading in new goods to be cut from 80% to 50%, and for the number of charity shops to be limited in a given area.

The recommendations, put forward by the Welsh Government’s Business Rates Task and Finish Group, have led to a fear by many charities to fear they will run up heavy losses in an already tough economic climate.

The Charity Relief Association (CRA) has previously said the proposed cuts would cost charities almost £2m from next year as well as the loss of 130 paid jobs and 1,800 volunteer roles and suggested that one in seven charity shops in Wales would be forced to close.

A consultation process on the report ended in June and collected more than 70 responses. The CRA is now waiting to see what steps the Welsh Government will decide to take next.

For St David’s Hospice Care, which has 36 charity shops in Wales, the charity shop model is working well.

But the charity’s deputy chief executive, Adrian Hadley, is worried about what the future holds for it.

“We’re concerned about the business rates – it’s going to cost us a fair bit of money if it’s approved,” he said.

“I can’t understand why they’re doing it to charities. If we’re kicked off the high street there’s going to be more empty shops.”

He added that the charity had reduced the leases for five out of six of its shops which are up in the next 18 months in an attempt to save money.

But some charities in Wales have already moved away from the high street model.

Age Concern Cardiff and the Vale of Glamorgan, which provides help to older people in the area including through its popular Welfare Rights Service, used a property consultant for advice on new ways of working.

The advice from Bruton Knowles led to the charity deciding to close its two retail shops after it saw a “significant downturn” in its retail sector in recent years.

The charity’s chief executive, Jeff Hawkins, said the lease on one of its shops was coming to an end in February and that it was no longer sustainable.

He said they were now researching other options such as a category collection route where the charity tries to get the public to donate what it is looking for rather than just donating everything.

He said another option could be to adopt a particular style or theme of shop such as a boutique or a recycle idea where bikes are repaired, refurbished and then sold.

The charity is still investigating these options but said its decision to leave the retail side of the business for the moment had now cut the charity’s operating costs by about £50,000 a year.

Mr Hawkins said: “The economic downturn has inevitably had a knock-on effect for smaller charities like us. We have been facing a triple whammy of decreased spending power, a drop in public sector funding, and competition from other charities on the high street.”

He said donations from the public were also under pressure as shown by the predicted 7% drop in donations to its Welfare Rights Service for this year.

But Mr Hawkins said: “If we cut costs on how we operate, it offers more security to the people we employ and to the services we provide.”

The charity has also decided to scale down its property portfolio and move away from leasehold property towards owned property.

It is now working on ideas for a “community hub” as a home for the charity as a whole which could include flexible working offices, conference suites, coffee shops, retail areas and therapy suites and the charity is now looking at potential properties for this.

This could be funded through grants such as the Property Loan Fund by the Unity Trust Bank and the Welsh Council for Voluntary Action (WCVA) which is aimed at helping organisations finance new premises or refurbish existing properties.

Richard Frost from Bruton Knowles said: “Smaller charities in particular are being pushed out of the retail market by a number of factors, not least increasing business rates, the knock-on-effect of which can make operations for smaller charities much more difficult.

“Finding ways to diversify and work smarter is are essential for charities who are facing a tough economic climate.”

The Welsh Government said it expected to make a further announcement on the review in the autumn.